Lloyds Banking Group (LLOY) investor relations material

Macroeconomic and industry outlook

• UK economy described as resilient but slow-growing, with GDP growth forecasted at 1–1.5% and healthy unemployment levels.

• Households and businesses show improved resilience, with rising savings rates, real wage growth, and strong discretionary spending.

• Business cash flows have strengthened for six consecutive quarters, though investment remains subdued.

• Sectors like infrastructure, green energy, housing, and tech are attracting significant investment and offer higher growth potential.

• Lending and balance sheet growth are outpacing the broader economy, with 3% asset growth in the first half of the year.

Regulatory and policy environment

• Government reforms and regulatory changes, such as the Mansion House and lease reforms, are fostering a more supportive environment for financial services.

• The budget is not expected to materially alter economic or growth trajectories, with a focus on enabling investment and balanced fiscal reform.

• Regulatory clarity and predictability are improving, especially in conduct risk and capital regimes.

• Ring-fencing is expected to remain in place for the near term, with potential changes only in the 2030s.

Strategic growth and business performance

• Revenue growth of about 30% over the current strategy period, driven by diversification into areas like pensions, insurance, and corporate finance.

• Mass Affluent and Premier propositions have significantly increased market share in mortgages and equity ISAs, attracting £25 billion in new savings.

• Ongoing focus on cost discipline, with £1.5 billion in gross cost savings and investment plateauing, leading to a flatter cost profile next year.

• Continued commitment to strong capital returns, with a sustainable dividend and buybacks, while also pursuing selective M&A for distinctive capabilities.